To set up Receivables to use cross currency receipts, perform the following steps.
Define a Cross Currency Rounding Account in the System Options window. Receivables uses this account to record any rounding error amounts created during a cross currency receipt application for currencies that have a fixed rate relationship.
When you create a cross currency receipt application, the resulting accounting entry includes several currencies: the receipt currency, the functional currency, and the accounting or functional currency. Receivables ensures that the proper FXGL is calculated so that the entry balances in your functional currency. The entry, however, does not balance in the entered currency (see the entry created in Example 1 in which a EUR receipt is applied to a CAD invoice). See: Applying Cross Currency Receipts - Examples.
When Receivables posts these multi-currency journal entries, Oracle General Ledger separates the entries by currency before balancing them. Next, General Ledger creates one entry to a clearing account so that each journal entry will balance in the entered currency. A clearing account is called a 'Suspense Account' in Oracle General Ledger.
Note: The entry to the clearing account will always be zero in your functional currency as the journal already balances in functional currency.
Attention: You do not need to enable suspense accounting for your ledger to apply cross currency receipts in Receivables. You only need to define a suspense account for journal entries created by your cross currency receipt applications.
The Oracle General Ledger Journal Import Program identifies all journals with a category of 'Cross Currency' that are imported from the source 'Receivables'. Receivables creates multi-currency entries each time you apply a receipt in one currency to a transaction in a different currency.
For each of these entries, Oracle General Ledger does the following:
Ignores the Out of Balance Errors: All cross currency receipt applications will be out of balance, since the currency of the receipt is not the same as that of the transaction.
Creates Balancing Lines: Oracle General Ledger will look to the suspense account that you define in the Suspense Accounts window and create a line to balance the journal entry.
When defining a Suspense Account for your ledger, enter a Source of 'Receivables' and a Category of 'Cross Currency.' See: Defining Suspense Accounts.
The profile option Journals: Display Inverse Rate lets you determine how you enter and display conversion rates in the Exchange Rate window. When you create a cross currency application, the field 'Cross Currency Rate' in the Applications window displays a value independent of this setting. This field will always display a value in accordance with the following:
Transaction Amount * Cross Currency Rate = Receipt Amount
Receivables will always use multiplication as the operation to convert the transaction currency to the receipt currency. In Example 1 Receivables multiplies the Amount Applied (90 CAD) by the cross currency rate (0.7111111) to calculate the Allocated Receipt Amount (64 EUR). See: Profile Options in Oracle General Ledger.